Wheat is a grass grown all over the world for its highly nutritious and functional grain. It is one of the top three most produced crops in the world, along with corn and rice. Wheat has been cultivated for over 10,000 years and probably originates in the Fertile Crescent, along with other staple crops. A wide range of products are made from it by humans, including most famously flour, which is made from the grain itself (as per sharecare).
Just on Thursday, Wheat rallied almost 17 cents on the Chicago Board of Trade above $5.21 per bushel. This mini-rally was predominantly a result of a reduced forecast of Russian wheat production by the United States Department of Agriculture. Popular wheat producing countries such as Australia, Argentina and the U.S. all signalled that exports will be lower due to droughts, causing stress on production. Chicago’s Price Futures Group Brokerage reports that “there are forecasts for hot and dry weather in the Midwest. Drier weather is forecast for Canada.”
Wheat is Australia’s most lucrative rural export from an agricultural sector that is worth approximately SGD$35 billion dollars. With Australia being on course to supply a smaller amount of exportable wheat crop, long-standing and traditional buyers such as Indonesian and Japanese millers will be forced to purchase from alternative markets such as Russia at this time, causing prices to rally.
As such, analysts are citing that wheat entry levels are still attractive with still plenty of room for potential upside. Hence, we recommend that wheat is a strong buy.
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CME Group Wheat Graph: https://www.cmegroup.com/trading/agricultural/grain-and-oilseed/wheat.html